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Wednesday, February 18, 2009

In case you missed it, Carl Icahn’s campaign to make boards of directors more accountable to shareholders—including, one assumes, the boards of Amylin, Biogen Idec and other biopharma businesses he would like to see move in different directions—now includes a plea for action from Congress.

In an editorial published in the Washington Post February 16, Icahn recaps his frustration with what he sees as a culture of insiderism in corporate boards and the challenges dissident shareholder groups face in making changes to the lineup.

The problem, Icahn argues, can be fixed simply, by allowing shareholders to vote on where their company should be incorporated—thereby allowing them to shop for the most shareholder friendly state laws.

"Corporate law is largely the province of states, which to varying degrees protect flawed governance models," Icahn wrote. "What is needed is a superceding federal law that gives shareholders the right to vote by simple majority to move their company's legal incorporation to states that uphold greater shareholder rights."

And Icahn has found his favorite jurisdiction, apparently: "North Dakota...is recognized as having the most shareholder-friendly corporate laws in the nation, thanks to recent legislative action. By incorporating in the state and adopting its provisions, a public company would in one easy step improve rights for its shareholders and eliminate the often too-cozy relations between managements and boards."

Ah for the gentle kiss of the Great Plains zephyrs in February!

We don’t know what the prospects are for action on Icahn's proposal, though presumably North Dakota’s congressional delegation is on board with the plan.

In the meantime, maybe some of Icahn’s targets can take the opportunity to steal a march on him? Amylin is deep in cost-cutting mode already, but has the company considered swapping its San Diego corporate offices for some new property out near Bismarck? Commercial real estate is much cheaper...

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